$1.14 billion of games were sold in 'traditional retail', according to figures from NDP, thanks to a rise (+13%) in new release consoles bought - Xbox One, PS4 released in November and a "strong showing" by Nintendo's 3DS and 2DS.

This is slightly more than the digital gaming market, now worth $899 million.

According to analyst Telsyte, the digital market surged 50% in 2013, driven by mobile games like Angry Birds, Candy Crush and in-game transactions buying lives, coins, as well as downloads, and subscriptions to platforms like Xbox.

The growth in digital gaming is largely driven by the popularity of 'freemium' mobile games, which accounted for nearly half of all purchases, says Sam Yip, Telsyte.

Consumers spent more than $452 million on mobile games in 2013, with 70 per cent of that on in-game, micro-transactions, or around $316 million, says Yip.

"We expect in-game purchases to grow," says Yip and games like Flappy Birds (now extinct) shows the "viral nature" of the mobile games industry.

Gamers spent more than twice as much on in-game transactions, than actually paying for the game which is often free or costs $1 or $2.

"At this rate, mobile game revenue could exceed that for physical games within a couple of years." Yip predicts.

Physical Games: you ain't seen the last of us.

However, IGEA's CEO Ron Curry, says the industry remains optimistic for the future of physical games.

"Traditional sales have remained steady across the industry. Despite concerns about retail, software sales recorded over $654 million for 2013," said Curry.

Franchises like Grand Theft Auto, Battlefield, Bioshock, Tomb Raider and Pokemon improved significantly as did The Last of Us.

"The interactive games and entertainment industry is really thriving," says Curry.

The market continues to evolve with games being delivered and consumed across a diverse range of consoles and mobile devices.

"The data (from NPD Group) is encouraging and shows that bricks and mortar retailers have maintained their fundamental role in providing hardware, software, digital content and merchandise to consumers."

We're in a cycle where there's growth in games bought in-store due to new release consoles also being purchased, says Yip. But by 2016, digital sales are expected to outstrip physical.

Consumers are expected to double their spend on digital games in 2014.

PC Games Sub Cards and Portable Games Cards were also popular among Aussie gamers.